Question

Assume a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approxi-mated their recorded book values except for a patent, which had a fair value of $200,000 and no recorded book value. On the date of acquisition, the patent had five years of remaining useful life and the parent com-pany amortizes its intangible assets using straight line amortization. During the year ended December 31, 2019, the subsidiary recorded sales to the parent in the amount of $240,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent’s inventory at December 31, 2019. The following summarized pre-consolidation financial state-ments are for the parent and the subsidiary for the year ended December 31, 2019:

Answer 1

Answer:

Explanation:

The file attached shows the full question

The picture attached shows the solution to the problem

Download docx

<span class="sg-text sg-text--link sg-text--bold sg-text--link-disabled sg-text--blue-dark"> docx